Parallel Energy Trust T.PLT.DB

RE:Spoke with IR yesterday...

[Kherson]

gvixid wrote: ...and asked them to comment on the company's plans and viability in the current low oil price environment. I was told that the strategic process is still ongoing so no hard details could be given. But there are three basic scenarios that are being considered. 1. Outright sale of the company 2. Sale of 1 of their 2 main fields to reduce debt 3. Sale of the both fields and a winding down of operations I pressed him and suggested that it's now impossible to get anywhere near fair value given current SP. Company BV is just over $2.00 while NAV (which includes debt) is about $0.37. No way a sale fetches unitholders anywhere close to NAV right now, so I can't see how the BOD could recommend such a transaction. My prediction is that they go the way of Argent and sell an asset to reduce debt and clean up the balance sheets. Debs aren't due for another two years, but unlike Argent, Parallel doesn't have six months of oil hedges at over $90 / barrell. IR admitted they are now strictly in survival mode, and a lot is riding on renewal of their credit facility on Sept 30. Terms won't likely be as favourable to the company as they are now, but its also unlikely that the lending syndicate (3 big Canadian banks along with Wells Fargo in US) will pill the plug. Argent got a renewal but with a higher interest rate, so expect something similar here. I have a lot of skin in the game, with close to 700,000 units in my margin account. I am averaging down and hoping for a pop to recover my capital. Then I am out of the commodity stocks for a good while...my nerves can't handle the roller coaster anymore. Any thoughts? Best of luck to all, gvixid

Thanks for the above info.
I firmly believe that Parallel should stay the course and wait it out for Natural Gas and NGL's prices to recover, which they will. I am in the Kent Moors camp on the future of NG pricing! He has just released a two part newsletter on why he thinks prices are gonna take off!
If you look at the EIA 7 year inventory numbers, you will find that Thursday's number is only 1% over the average, but if you remove last year's inventory number from the mix, which was 2.555 tcf, you will find that the N.G. storage number is actually 2% under the average!
Kherson